Friday, July 10, 2015

The War on Drugs is Logically Incoherent

I have read many
criticisms of the War on Drugs, but I never see it pointed out that it is
internally inconsistent. It truly requires inconsistent assumptions to work.

Are drug users rational
or irrational? If they are rational, then they are already accounting for the
built in deterrents of drug use and the current rates of use are appropriate.
If they are irrational, then legal punishments will fail to deter them.

One can think of this as
asking two yes/no questions and filling out a grid with the four possible
combinations of answers. The first question is: Is drug use harmful? The second
question is: Are the users rational? The combination of answers can be used to
set the optimal drug policy. If the answer to the first question is “No,” then
your job is done. Legalize the drug for use. It doesn’t matter if people are
rational or irrational if they’re doing something that isn’t harmful.

So what happens if the
answer to the first question is “Yes”? Consider the “drug use is harmful/users
are rational” combination. There isn’t a problem here, because the users are
already accounting for the risks of drug use, taking appropriate precautions,
and using appropriate amounts. “But what about costs to third parties?” you
say? Those are also already accounted for. If taking “Drug X” might turn me
into a murderer (or burglar or rapist), then as a rational user I would already
be accounting for that probability. Not liking the prospect of a long prison
term, I’ll have moderated my drug use or decided against use entirely. And in
any conceivable regime DUI would remain a crime, regardless of the legal status
of the drug. In the “rational user” scenario, drug use has some costs *to me*,
but all the “external” costs are internalized, because all the ways I might
harm somebody under the influence are already criminalized (and rightly so!).
In this scenario, drug users will respond to criminal sanctions against drug
use by reducing use, but that’s overkill because they are already accounting
for the costs and have already moderated their behavior appropriately. You’ll
achieve some additional deterrence, but it can hardly be worth the cost of
needlessly punishing the users who are caught. Keep in mind that “drug
prohibition” means “occasionally ruining the lives of a few random drug users.”
This is a cost that shouldn’t be taken lightly.

Now consider the “drug
use is harmful/users are irrational” scenario. In this case, users are not
deterred by the pharmacological risks of drug use. However, they are also not
deterred by the legal risks of drug use. So you can “ban” drugs and punish a
few random drug users, but the deterrent effect is too small to matter.

In none of these
scenarios can any serious person recommend drug prohibition as a policy. You
either fail to achieve any significant deterrence, or you succeed in deterring
something that’s not a problem. You don’t get to assert that drug users are too
irrational to respond appropriately to one set of risks (the pharmacological
risks of drug use) and yet rational enough to respond appropriately to another
set of risks (the legal risks of drug use). Such an assertion, implicit in all
advocacy for drug prohibition, is logically incoherent.

Of course this is all a
little too glib. These things aren’t binary. Drugs vary in the degree of harm
they might cause. People vary in their degree of rationality. The severity of
the legal sanctions can vary. And not all the external costs of drug use are
truly internalized (think of the spread of AIDS from IV drug users to their
non-using sexual partners, which isn’t effectively criminalized). Still, it’s
hard to tell a story where the punishment achieves any significant deterrence.

Assume for a moment that
people are rational enough to be deterred by legal sanctions. To figure out how
much deterrence you are achieving, you have to now compare the costs intrinsic
to drug use to the legal penalty for drug use. The intrinsic costs include
things like the possibility of death, serious health problems, alienation of
friends, loss of social status, loss of a job, and the time and money spent
acquiring and using the drugs. (You would have to discount the “severe but
unlikely” items, like death, by considering the small probability of realizing
those costs. Also, note how some of these “intrinsic” costs can be exacerbated
by the black market status of the drug.) Seen this way, drug prohibition
doesn’t raise the cost of drug use from “zero” to “something positive”. It raises
the cost from “something substantial” to “something somewhat more substantial.”
You can achieve a great deal of deterrence by threatening drug users with life
in prison or the death penalty, but with severe penalties you risk doing more
damage than the drugs themselves are doing. In this case the cure is worse than
the disease, so what’s the point? You can expect significant deterrence ONLY in
a regime where the expected harm from legal sanctions is comparable to the
expected harm from drug use. If a government DOES achieve any kind of
significant deterrence, its lawmakers and technocrats should suspect that the
penalty has been set too high.

Let’s consider another
set of two binary questions: Are the intrinsic costs of drug use high or low?
Are the legal costs of drug use high or low? If it helps, think of these costs
as something concrete. A “low” cost might mean a 0.1% chance of ruining your
life, or perhaps the loss of a week’s income. A “high” cost might mean a 5%
chance of ruining your life, or losing a full year’s income. Use whatever
measure you like, and use whatever differential between “low” and “high” you
like (I’m using a factor of ~50). In the low/low and high/high scenarios, you
can probably assume there’s some degree of deterrence. The intrinsic costs of
drug use (those costs that would be present in the absence of legal sanctions)
are comparable to the legal costs. If you’re roughly doubling the price of
something, you should expect to see a decline in the quantity demanded. But in
both cases the added (legal) harm is comparable to the (intrinsic) harm
deterred, so it’s hard to declare “victory.” In the “low intrinsic cost/high
legal cost” regime, you can say with some certainty that there is a great deal
of deterrence, but the harm done to the few random users who are sanctioned is
difficult to justify. Naturally if you take an activity that is mildly
dangerous and make it 50 times as dangerous, you’ll surely achieve some
deterrence. But surely it’s not worth it. In the “high intrinsic cost/low legal
cost” scenario, you don’t do much additional harm, but you don’t really achieve
much deterrence either. (If you use the cost differentials I give at the
opening of this paragraph, the increase in cost is about 2%.) So you achieve a
completely insignificant amount of deterrence, and to do so you still have to
harass a few drug users. In none of these cases can you confidently claim that
the deterrence is worth the costs imposed by legal sanctions. Ideally you could
achieve a great deal of deterrence in return for doing a small amount of harm
to existing users, but it’s hard to imagine a scenario were this actually
happens. If you’re an economist drawing someone’s demand curves for drugs, you’d
have to specify that there’s an inexplicable discontinuity that the legal penalty
exploits perfectly.

To properly do this
analysis someone would have to specify everyone’s demand curves for drugs and
show what happens when you add the costs imposed by legal sanctions on top of
the intrinsic costs. That said, it’s worth exploring this exercise in plain
English. I’d be very surprised if anyone came to a substantially different
conclusion by drawing explicit demand curves and doing a formal cost/benefit
analysis of imposing legal sanctions.

In this entire
discussion, it may seem that I’m ignoring the legal sanctions on the supply
side. For the most part, drug users get a slap on the wrist and drug dealers,
smugglers, and producers get heavy penalties. These supply-side penalties
simply serve to drive up the market price of illegal drugs. In my above
discussion of the legal costs of drug prohibition, the cost includes both the
legal penalty applied to the user and the increased market price. As a side
note, this entire regime of extreme legal penalties on the supply side is
terribly inefficient. If a government wishes to increase the market price of
drugs, it should do so with a tax that it can collect. You have far less
collateral damage in terms of drug dealers killing each other, tainted product,
inconvenienced motorists being subjected to unnecessary searches, and terrified
residents being subjected to no-knock raids. And in the case of a tax, the
costs imposed on producers actually *go to* someone. They become a “transfer”
instead of a “dead-weight loss.” The “tax” regime is infinitely preferable to
the “criminalize producers” regime. But that could be another post all on its
own.

Note that all of the
above discussion is broadly consistent with the empirical record of drug
prohibition. We have over a century’s worth of evidence covering very different
anti-drug regimes (mild to severe punishment) and we see very little change in
overall drug use. The War on Drugs is busted. It's time to move past it.